Borrowers favour flexibility as rate outlook remains uncertain
Nearly half of individuals searching for initial fixed rate mortgages are leaning towards two-year terms, according to recent figures from Moneyfacts Analyser.
Over the past month, 48.8% of visitors to the Moneyfacts website who compared mortgage products focused on two-year fixed-rate options, with 27.1% of searches more attracted to five-year fixed rates. Fixed rate mortgages overall accounted for 92% of all mortgage-related activity on the site.
Within the two-year fixed rate category, first-time buyers represented 4.1% of searches, second-time buyers made up 19.1%, and those seeking to remortgage comprised 22.5%.
One-year fixed rate deals proved least attractive, drawing only 0.7% of interest. Meanwhile, 6.3% of users explored 10-year fixed rate options, despite prevailing mortgage rates remaining higher than in previous years.
For variable rate mortgages, the two-year initial rate was again the most popular, with first-time buyers accounting for 0.4%, second-time buyers for 0.6%, and remortgage customers for 1.1%.
The strong preference for two-year fixed rate mortgages suggests borrowers are seeking flexibility amid uncertain rate movements. Mortgage brokers should be prepared to advise clients on short-term options and help them weigh potential future rate changes, as well as discuss the risks and benefits of shorter versus longer fixed terms in the current economic climate. This trend may also increase demand for regular remortgage advice.
“It comes as little surprise that many borrowers are interested in a two-year term given the general expectation for rates to continue steadily falling over the short-to-medium term,” said a Moneyfacts spokesperson.
“The Moneyfacts average two-year fixed mortgage rate has fallen from 5.2% at the start of 2025 to 4.98% now, recently dipping below 5% for the first time since the aftermath of the so-called mini Budget in September 2022.
“However, given that inflation is forecast to sit above the Bank of England’s 2% target until at least 2027 and that the cost of government borrowing has been climbing, there are still plenty of economic challenges on the horizon which may influence mortgage rates and borrower behaviour in the future.”
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